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Finovate Blog
Tracking fintech, banking & financial services innovations since 1994
The partnership will enable Varo Bank to offer a range of new products including digital wallet tokenization via Apple and Google Wallets for its cardholders.
Headquartered in Oakland, California, Marqeta was founded in 2010.
Card issuing platform Marqetahas signed a five-year deal with Varo Bank to serve as the financial institution’s issuer processor. Marqeta’s ability to blend virtual, tokenized, and physical card-issuing technology with faster speed-to-market was among the factors cited by Varo Bank in teaming up with the fintech.
“We sought an issuer partner that complements our unique position as both a technology company and a regulated financial institution,” Varo Bank CEO Colin Walsh explained. “This partnership with Marqeta enables us to offer cutting-edge card issuing technology, giving our customers enhanced ability to view and manage their transactions efficiently. This advancement aligns perfectly with our mission of financial empowerment.”
Widely recognized as one of the first nationally-chartered consumer-based techbanks in the U.S., Varo Bank offers fee-free checking accounts, high-yield savings accounts, secured credit-building credit cards, instant payment solutions, and free ATM access at more than 40,000 locations. Varo Bank’s mobile app enables customers to review and improve their financial health, and now, courtesy of the institution’s partnership with Marqeta, the bank will enable digital wallet tokenization with Apple and Google Wallets for its cardholders.
“Marqeta is proud to announce this deal with Varo Bank, which relies on the latest payments and banking technologies to help Americans who are striving to get ahead,” Marqeta CEO Simon Khalaf said. “Varo’s mission is aligned with ours and we can’t wait to start innovating with the Varo team, enabling their customers to see transactions in real-time thanks to Marqeta’s APIs.”
Marqeta is an alumnus of our developers conference series, FinDEVr. The company presented its technology at our event in Silicon Valley in 2016. In the years since then, the Oakland, California-based fintech has grown into a major, modern card issuing platform operating in 40 countries and processing more than $160 billion in volume in 2022. The company’s partnership news with Varo Bank comes less than a month after Marqeta announced that it had become the first issuer processor in the U.S. that was certified to enableVisa Flexible Credential, a product that provides access to multiple funding sources from a single payment card.
Digital banking solutions provider Blend has forged a partnership with instant payments-as-a-service company Astra. The partnership will integrate Astra’s Card to Account payment solution directly within Blend’s Deposit Account application flow. This will enable Blend customers to drive digital engagement beyond the initial application capture, lowering abandonment rates and helping consumers complete applications faster.
“Today consumers expect a frictionless, real-time product experience, and that starts at account opening,” Astra CEO and Co-Founder Gil Akos said. “Financial institutions and fintechs need to deliver a best-in-class onboarding flow to win new customers – instant account funding is the perfect solution, leading to improved activation rates of 30% or better on day one. We’re proud to partner with Blend to offer this experience to their customers.”
Funding by card is an increasingly popular option given the relative inconvenience of other methods, such as ACH transfers. By comparison, funding new accounts via debit cards is a faster and more seamless process (no routing or account numbers to remember). And because cards only enable transactions up to the available balance, card funding also helps avoid potential overdrafts when using ACH transfers, a risk for consumers who may have limited funds or irregular cash flow.
Further advantages include accelerated onboarding, more activated accounts, reduced abandonment, a smoother application experience, and less manual intervention.
Blend noted in a statement that card funding is also one of the more popular ways for consumers to fund new accounts. The company pointed to one of its customers, a major credit union, that reported that 82% of their new deposit accounts were funded using Astra card funding. Another credit union customer of Blend said that 66% of its consumers preferred funding via Astra card compared to other methods. Card funding for Blend Deposit Accounts is now generally available for all customers.
Astra offers a platform for instant payments that enables product teams to embed payments into their solutions. The company’s API facilitates seamless fund transfers between bank accounts and cards, providing a fast, secure, and built-for-scale alternative to traditional fund transfer methods such as ACH.
Astra launched its first, end-to-end instant payment solution with FedNow in the fall of 2023. In December, the company announced a partnership with merchant connectivity platform Knot to enable seamless card switching with instant funding. Founded in 2016, Astra is headquartered in Menlo Park, California.
Blend demoed its technology at FinovateSpring 2016. At the conference, the company demoed its Data-Driven Mortgage solution which leverages high-fidelity data sources to drive down origination costs, maintain digital compliance, and provide a positive user experience for borrowers.
Last month, Blend announced its acquisition of applied AI company nuvu, and expanded its partnership with DataIQ. In May, Blend secured an investment of $150 million from technology-focused private equity firm Haveli Investments.
Headquartered in San Francisco, California, and founded in 2012, Blend is a publicly-traded company on the NYSE. Trading under the ticker BLND, the company has a market capitalization of $678 million. Nima Ghamsari is CEO and Co-Founder.
In partnership with financial literacy platform Doshi, Yorkshire Building Society is offering online financial education to first-time prospective homebuyers.
The new free tool, available on the YBS website to customers and non-customers alike, walks new homebuyers through the entire home-buying process.
Doshi made its Finovate debut earlier this year at FinovateEurope in London.
Yorkshire Building Society (YBS) has teamed up with gamified financial literacy platform Doshi to launch an online educational program for first-time prospective homeowners. The new tool is available in the mortgage section of Yorkshire Building Society’s website, and guides borrowers through the process of applying for a mortgage and buying their first home.
The program walks prospective homeowners through the entire home-buying journey, including how to prepare for buying a home, how to secure financing, understanding the various steps of the home-buying process, and the importance of maintaining their home once they’ve made their purchase. The program explains important concepts and potentially unfamiliar terms, and provides a timeline of the overall process. The tool is available free of charge to both YBS customers and non-customers.
“Partnering with Yorkshire Building Society to empower aspiring homeowners is a significant step toward making homeownership more accessible,” Doshi CEO Daniel Rose said. “Our program demystifies the mortgage process, providing engaging, bite-sized guidance every step of the way. We are excited to see the positive impact on first-time buyers.”
The new offering comes in the wake of research conducted by YBS that indicated that a lack of knowledge about the home-buying process was a major barrier for would-be homeowners. YBS noted that only 18% of those surveyed felt knowledgeable about the mortgage process, with even fewer respondents – 14% – saying that they knew what financial factors were key when applying for a mortgage. The survey further indicated that only 45% of respondents believed that a good credit score was an important factor in securing a mortgage. Only 34% stated that the ability to repay debts was important when it comes to obtaining the financing necessary to buy a home.
“We know from customer research that people feel more confident in their decision making when they are informed and know what to expect, which is why we are trialing this new learning tool, aimed at helping first-time buyers understand more about the home-buying process,” YBS senior manager for digital mortgage and enabling services Geddy Meguyer said.
The third-largest building society in the U.K., Yorkshire Building Society is a financial services mutual organization that offers savings, investing, insurance, and mortgage products. Headquartered in Bradford, West Yorkshire, YBS had total assets of more than £60 billion as of December 2023. Along with its assets – the Chelsea Building Society, the Norwich and Peterborough Building Society, Accord Mortgages, and savings business Egg – known as the Yorkshire Building Society Group, the group employs more than 3,000 and serves a membership of three million.
YBS’s partnership with Doshi is the latest effort by the building society to support first-time homeowners. This spring, YBS launched its £5k Deposit Mortgage product, which enabled first-time homebuyers to buy a property worth up to £500,000 with a deposit of only £5k, rather than the typical 5% down payment. The idea behind the £5k Deposit Mortgage was to deal with the biggest obstacle prospective homebuyers tend to face – raising the funds for a down payment.
Doshi made its Finovate debut at FinovateEurope 2024 in February. At the conference, the company demoed its white-label app, which leverages personalized learning journeys and community rewards to turn complex topics into engaging experiences. Doshi’s AI-powered financial assistant technology is built for banks, credit unions, and fintechs, and is available as an app, a plug-and-play web module, as well as via API.
Doshi was founded in 2021. The company is headquartered in London.
A major sell-off in the stock market is giving investors jitters as August begins in earnest. Funding news for companies in lending and wealth management leads the fintech news this week. Be sure to check back over the next few days for the latest updates and announcements.
Lending
U.K.-based SME lender Shawbrook partners with nCino to automate loan origination.
Alternative financing company for mid-sized SMEs, ThinCats, secures a £75 million mezzanine facility.
This week’s edition of Finovate Global highlights recent fintech news from India.
A strategic partnership between financial software applications and marketplace company Finastra and Tech Mahindra, announced today, will help corporate banks accelerate their digital transformation journeys. Specifically, the partnership will make Tech Mahindra the exclusive global implementation partner for Finastra’s Cash Management platform. Tech Mahindra will also become the preferred partner for Finastra’s Trade Innovation and Corporate Channels solutions in the U.S., Canada, and Europe.
“This is an important partnership that aligns closely with our commitment to helping our customers navigate today’s challenges and embrace much needed digitalization,” Finastra CEO Simon Paris said. “The broad portfolio of services and deep experience offered by Tech Mahindra are a valuable complement to our modern and open software. With this combination, we look forward to propelling the digital transformation of even more banks and financial institutions around the world.”
The partnership will enable the two companies to offer a variety of cross-functional solutions across digital advisory, system integration, integrated infrastructure, and cloud services. These solutions will help corporate and institutional banks streamline and digitalize their operations. Financial institutions will further benefit from faster time to value for customers courtesy of faster implementations and upgrades.
“This partnership brings together two global leaders in digital transformation and financial services applications to help corporate banks scale at speed,” said Tech Mahindra CEO and Managing Director Mohit Joshi. “We believe our joint efforts will redefine the way banks digitize to improve their profit margins.”
Founded in 1986, Tech Mahindra is an international IT services and consulting company, headquartered in Pune, India. Part of the Mahindra Group, Tech Mahindra has more than 147,000 employees in 90+ countries serving 1,100+ clients. The firm offers solutions and expertise in verticals ranging from banking, insurance, and telecommunications, to media, entertainment, and retail. The first Indian company to earn the Sustainable Markets Initiative’s Terra Carta Seal, Tech Mahindra is publicly traded on India’s National Stock Exchange (NSE) and has a market capitalization of $17.8 billion (₹1.5 trillion).
The product of a union between Finovate alum Misys and D+H in 2017, Finastra offers software and solutions for financial institutions across lending, payments, treasury and capital markets, as well as retail, digital, and commercial banking. The company’s technology for banks helps them develop their direct banking relationships and to grow through new channels such as Banking-as-a-Service and embedded finance. More than 8,000 institutions – including 45 of the world’s top 50 banks – rely on Finastra’s technology.
The Reserve Bank of India (RBI) has been making fintech, financial, and economic news of late. On the fintech side, the RBI has granted cross-border payment licenses to three fintechs: BillDesk, Amazon Pay, and Adyen. These licenses will enable these companies to operate as cross-border payment aggregators and, ultimately, to offer their customers payment services for both imports and exports.
The RBI has been actively encouraging many fintechs to secure payment aggregator licenses; more than 20 companies have been granted PA licenses to date. In many of these instances, the RBI has suggested that companies interested in cross-border payments in particular apply for these licenses. Another firm that recently secured its PA license for cross-border payments for import and export from the RBI is Cashfree Payments.
In order to secure PA licenses, fintechs must register under the Financial Intelligence Unit-India (FIU-IND) in order to become authorized to process transactions. Fintechs must also maintain a minimum net worth of Rs 15 Cr ($1.8 million) during application, a sum that will increase to Rs 25 Cr ($2.9 million) after March 2026.
Speaking of payments, the RBI is now a part of Project Nexus. The first project from the payments sector of the Bank for International Settlements (BIS), the project seeks to connect the Faster Payment Systems of four Association of Southeast Asian Nations (ASEAN) countries – Malaysia, the Philippines, Singapore, and Thailand – and India. While India’s RBI has collaborated with a number of other countries via its Unified Payments Interface (UPI) to support bilateral payments, RBI’s participation in Project Nexus is the first time the bank has officially joined a multilateral project of this scope.
Additional countries are expected to be added over time. The project will help small and medium-sized businesses in India make faster, less expensive, and more reliable cross-border payments. To this end, the project will also make it easier for Indian banks to offer cross-border payment services to a broader range of countries. Speed and greater transparency are also among the benefits highlighted by observers.
Are you a fan of CBDCs? This week, the RBI reported that its central bank digital currency (CBDC) pilot has five million users and 420,000 participating merchants as of June 30. According to Reuters, transactions in the digital rupee are running at a pace of 100,000 a day, significantly below lofty expectations and hopes of one million transactions a day by 2023. It has also been pointed out that the digital rupee may suffer from competition with the country’s popular faster payments system, UPI.
Nevertheless, the digital rupee may be getting a bit of a boost courtesy of cryptocurrency exchange Bybit, which launched digital rupee payments on its platform this week. According to Cointelegraph, the digital rupee will be available as a wallet-based payment option, along with the exchange’s payment options in rupees via bank transfer, third-parties such as Paytm, and India’s Unified Payments Interface (UPI).
“By incorporating the eRupee payment, Bybit aims to elevate the payment experience for INR (Indian rupee) users, fostering trust and reliability in every transaction,” said Bybit sales and marketing director Joan Han. “Furthermore, this initiative is expected to attract a wider pool of merchants to the platform, driving business growth and expanding the reach of Bybit’s services within the market.”
Founded in 2018, Bybit is the second-largest cryptocurrency exchange by trading volume in the world, with more than 37 million users.
Here is our look at fintech innovation around the world.
Middle East and Northern Africa
Faye, an insurtech startup based in Israel, raised $31 million in Series B funding.
Egyptian B2B platform Cartona secured $8.1 million in a Series A extension round led by Algebra Ventures.
Israel-based financial crime detection company ThetaRayacquired screening company Screena.
Central and Southern Asia
Bangladesh-based fintech Nagad teamed up with Huawei Technologies.
The Reserve Bank of India approved cross-border payment licenses for BillDesk, Amazon Pay, and Adyen.
Texas-based migration fintech Vesti announced an expansion to Bangladesh, India, and Pakistan.
Latin America and the Caribbean
Caribbean-based PROVEN Bank partnered with Ireland’s Fenergo to enhance its transaction monitoring and AML operations.
Mexican fintech platform for the underbanked and microbusinesses Aviva raised $5.5 million in funding.
Rippleteamed up with the National Federation of Associations of Central Bank Servers (Fenasbac) to promote fintech innovation in Brazil.
Asia-Pacific
ADVANCE.AI launched its KYB business intelligence service to enhance its operations in Singapore and Malaysia.
Polish IT solutions provider Comarch announced a strategic partnership with DSK Bank.
The partnership will help accelerate a strategic digitization program the bank launched in 2021.
Comarch has been a Finovate alum for more than a decade, making its Finovate debut at FinovateEurope 2013 in London.
Comarch, an IT solutions provider and systems integrator based in Poland, has forged a strategic partnership with DSK Bank. The partnership will accelerate the Bulgaria-based financial institution’s ongoing strategic digitalization efforts, which began in earnest in 2021.
“We are delighted to support DSK Bank in achieving its digitalization goals with our cutting-edge IT solutions,” Comarch Group CEE Director Piotr Kusek said. “This partnership underscores our mutual commitment to introducing innovative strategies that will transform the banking landscape and elevate financial services to a new level.”
An international IT business solution provider, Comarch employs 6,400 engineers, business consultants, marketing specialists, and other professionals who help optimize operations and business processes for companies in a wide variety of verticals including telecommunications and financial services. Comarch’s clients include BP Global, Telefónica Global, and Vodafone Germany.
Part of the OTP Banking Group, DSK Bank is Bulgaria’s largest bank. The institution was founded in 1951, and has total assets of more than $15.8 million (€14.74 million). In the spring of 2022, DSK Bank teamed up with another Finovate alum, Backbase, to support its digital transformation efforts.
Founded in 1993 and headquartered in Kraków, Poland, Comarch made its Finovate debut at FinovateEurope 2013. Within a few years, the company reported revenues in excess of PLN 1 billion, hired its 5,000th employee, and opened its 90th worldwide office. Comarch launched its modern financial platform for business, Apfino, in 2021, and unveiled Poland’s first commission-free shopping platform, Wszystko.pl, in 2023.
This year, the IT solutions provider has extended its partnership with Dutch telecommunications operator KPN, teamed up with insurance company P&V Group – which will adopt Comarch’s Employee Benefits solution – and announced a collaboration with UAE-based telecommunications company and ICT player du. Last month, Comarch joined the European Loyalty Association, partnered with charitable organization The Blind Loyalty Trust, and secured accreditation as a Peppol Service Provider in Malaysia.
Loan intelligence system company Parlay will join Mastercard’s Start Path Small Business program. Parlay is one of eight companies selected.
Parlay’s technology complements a bank’s or credit union’s loan origination system to streamline and enhance small business loan processing.
Parlay made its Finovate debut at FinovateSpring 2024 in May as part of our Sustainability & Inclusion Scholarship program.
Parlay, which offers an AI-powered Loan Intelligence System (LIS) to help community banks and credit unions boost small business loan volume, is one of eight startups selected to participate in Mastercard’sStart Path Small Business program.
The incoming cohort consists of startups that have shown “dedication to democratizing financial tools and providing cutting-edge services for SMEs,” Mastercard noted in a statement. The statement underscored specific functions – such as spend management, onboarding, risk monitoring, loan approvals, and embedded finance solutions – that innovative fintech startups are helping digitize for small businesses.
Joining Parlay in the upcoming cohort of the program are Ballerine, Boost, CredibleX, Digi, Merge, Prime Dash, and RedOwl. The four-month program will give these startups the opportunity to leverage Mastercard’s network and subject matter expertise to forge product partnerships that help small businesses digitize their operations.
Parlay’s embedded fintech software helps lenders achieve a 64% increase in approved loans and an 87% reduction in manual underwriting workload. A white-label solution that complements loan origination systems, Parlay’s technology enables lenders to generate high-quality loan packets and maximize the eligible applicant pool. The company’s LIS also offers readiness insights to help businesses improve their creditworthiness; pre-screening to identify prime, marginal, and ineligible candidate pools; and pipeline analytics to enable loan officers to monitor applicant progress and underwriting eligibility.
“After a decade of work in economic development, our team realized that 77% of small businesses still struggle to access affordable capital and lack the insights need to navigate the lending process,” Parlay founder and CEO Alex McLeod said in a statement announcing the final eight startups invited to join the program. “We envision a future where community lenders, powered by Parlay’s AI-driven loan intelligence system, can get millions more small businesses approved for loans using unique, personalized insights that help both lenders and borrowers.”
Parlay made its Finovate debut at FinovateSpring in May as part of our Sustainability & Inclusion Scholarship program. The program is designed to spotlight underrepresented founders, as well as startups that are tackling issues such as climate change, diversity, and financial inclusion. Scholarships provide startups with complimentary demo participation, as well as the ability to network with our 2,000+ senior-level fintech attendees, fellow demoing companies, and more.
Past scholarship winners include Best of Show winning companies like Debbie, which won Best of Show at FinovateFall 2023, as well as Kobalt Labs and Remynt, both of which won Best of Show at FinovateSpring 2024.
Founded in 2022, Parlay is headquartered in Alexandria, Virginia.
There was a time when robo-advisory represented the peak of fintech’s contribution to the wealth management industry. And these services continue to be popular options for a new generation of savers and investors. The Statista Market Forecast indicates that the robo-advisor market worldwide is expected to grow by more than 6% by 2028, with more than 34 million investors relying on robo-advisors.
At the same time, enabling technologies like machine learning and AI are generating new ways for fintechs to bring the benefits of technological innovation to the wealth management industry. But it is important for fintechs to avoid building solutions in search of problems. What are some of the real trends and true pain points in the industry that fintechs may be able to help solve?
Democratization
One major theme in wealth management is democratization. For generations, wealth management has been the province of, to put it bluntly, the wealthy. Services were often expensive and opaque for the growing number of upper-middle class and middle-class investors of the 1980s and 1990s.
There is still a healthy market for high net worth investors, of course. But we have seen a major trend toward leveraging technology to make some wealth management services that were previously available only to the elites accessible to investors of lesser means.
There is also another way of looking at democratization in wealth management. In the same way that technology is enabling average investors to access increasingly sophisticated wealth management services, so is technology making it possible for smaller providers to compete with larger wealth management rivals. Fintechs that can help smaller firms and family offices do more with less may find significant opportunities among the growing group of wealth management entrepreneurs.
Personalization
Personalization has increasingly been seen as table stakes in financial services, and with good reason. Whether you are involved in payments or lending or ecommerce, the ability to get relevant products and services in front of your customers is paramount. Not just knowing what customers might want but also being able to deliver is what separates those businesses that gain new customers and keep the ones they’ve got, from those who struggle to do so.
Fintechs can enhance the customer experience by, for example, ensuring that wealth managers can communicate with clients in their channels of choice – and are able to bring significant functionality to those interactions in those channels with video or co-browsing. Knowing which customers are more likely to respond positively to new or alternative investment strategies, for example, or to other complementary products or services can go a long way toward building better engagement and loyalty.
Operations
One of the less flashy areas where fintech technologies can help drive innovation in wealth management is in back-office operations. This is also where enabling technologies like artificial intelligence (AI) and machine learning are delivering Automation 2.0 to intelligently streamline manual tasks and complex procedures. This trend, which has brought speed, accuracy, and cost-cutting to industries throughout financial services, is one that will benefit wealth management service providers significantly.
Moreover, many of the other trends in wealth management – such as the challenges of managing (and securing) ever-growing volumes of data, keeping up with evolving regulatory changes – are made possible by operations teams that have these powerful, enabling technologies at their disposal. For wealth management service providers who are not yet maximizing their teams or these technologies, fintechs can help them close the gap.
Decisioning
From buy-and-sell decisions to strategic portfolio allocations, wealth management is about making good, consistent decisions. Not only do wealth management service providers constantly seek to improve their investing strategies – one area where fintechs can provide specific expertise – but also these firms need to think about more than just maximizing returns. Keeping portfolio volatility at an acceptable level based on the risk tolerance and profile of the individual investor is just one example of another important function of the successful wealth manager.
Making good decisions is also about accountability. Having systems in place that ensure that processes are explainable and auditable is critical to accountability. It is also vital to an institution’s ability to learn, adapt, grow, and improve.
Compliance
Keeping up with the latest regulations is important for all financial service providers – and wealth management companies are no different.
As mentioned previously, one of the biggest benefits of enabling technologies like machine learning, AI, and Automation 2.0 is the ability for firms to track regulatory changes and ensure that their operations are able to meet new standards. An article earlier this year in Financial Planninglisted 10 separate regulatory issues that wealth management firms are likely to face this year, from regulations on marketing language to rules governing digital assets. Moreover, many wealth management firms have internal rules and mandates based on the type of investments they offer and to whom. As such, remaining compliant with an institution’s own governing policies is also a challenge for which regtechs in our industry can provide assistance.
Growth
One of the most exciting ways that fintechs can bring innovation to wealth management services providers is to enable them to grow and expand their businesses by offering services that, while complementary, could be difficult to offer (much less integrate) without technology partners.
Whether through APIs or embedded finance, there are a range of complementary services that fintechs can provide to wealth managers. From insurance to estate planning to secure document digitization and storage, fintechs are able to provide services that wealth management customers often need, but are inclined to get elsewhere. By adding these solutions and services to their product mix, wealth managers can dramatically increase their capacity to grow.
Terms of the acquisition were not disclosed, but the companies have been partners since the spring of 2022.
ThetaRay made its Finovate debut at FinovateFall 2015.
AI-powered financial crime detection technology company, ThetaRay, has acquired European screening company, Screena. Terms of the transaction were not disclosed.
Screena specializes in screening individuals, companies, and other entities against sanctioned party lists. The company’s APIs support syntactic, phonetic, and semantic matching, as well as multicultural recognition services. Each of these technologies is valuable at a time when more companies and financial institutions are taking advantage of opportunities in cross-border payments and trade.
From navigating spelling differences and out-of-order components to comprehending multiple alphabets including Arabic, Cyrillic, Chinese, and Thai, Screena has a near 100% true detection rate and screens 500+ transactions per second in live conditions. Founded in 2020 and headquartered in Luxembourg, Screena helps financial institutions identify bad actors who may be engaged in activities ranging from money laundering to drug trafficking to terrorist financing.
Screena CEO Cédric Iggiotti said that the integration with ThetaRay was a “game-changer” for the company. “For too long, screening was siloed from other critical financial crime detection tools,” Iggiotti said. “Our partnership with ThetaRay not only meets stringent regulatory demands but also significantly enhances our crime detection capabilities, as evidenced by our recent successes with major financial institutions.”
ThetaRay and Screena have been partners since the spring of 2022, when ThetaRay chose the startup as its screening solutions partner. In a statement on this week’s acquisition, ThetaRay CEO Peter Reynolds spoke of the company’s “mission to power the global fight against financial crime” through the use of AI-enabled technologies. He added that the acquisition “furthers our commitment to delivering an end-to-end platform that enables banks, fintechs, and regulators to effectively identify financial crime – vital capabilities to grow and operate a financial institution today.”
Israel-based ThetaRay made its Finovate debut at FinovateFall in 2015. Today, the company has more than one billion users, enables more than 11 billion in trusted transactions a year, and monitors more than $15 trillion in transactions annually. The company’s signature offerings include its transaction monitoring and screening solution, SONAR, as well as its Customer Risk Assessment (CRA) product unveiled earlier this year.
Reynolds was named CEO of the company last summer. He succeeds Mark Gazit, who had been ThetaRay’s CEO for more than 11 years.
This morning CrowdStrike CEO George Kurtz reported that 97% of the Windows sensors knocked out during CrowdStrike’s botched software update a little over a week ago are back online. That’s great news for those companies still reeling from one of the biggest IT outages in history.
When it comes to cybersecurity companies, CrowdStrike is widely considered to be a belle of the ball. Here’s wealth manager Josh Brown, a shareholder in the company since 2020, bringing the roses less than a year ago:
You can talk as much about cloud and mobile and social and machine learning and distributed computing and generative AI as you’d like, if you can’t secure your data and provide safe access to users, you have nothing. Literally ….
Spending on top-of-the-line security solutions has now been enshrined into securities law, in addition to all the other reasons to take this stuff seriously, such as not getting sued into the stone age by your customers or forced to make Bitcoin ransom payments to international cyber terrorists ….
As a business manager, you would cut IT spending on literally anything else first. A small handful of publicly traded companies have what I consider to be a massive runway ahead of them. CrowdStrike is aiming to become the Salesforce of the industry.
To recap: Friday morning, July 19, a bug in a CrowdStrike software update resulted in major IT outages that grounded flights and brought chaos to banks and other businesses around the world.
“CrowdStrike is actively working with customers impacted by a defect found in a single content update for Windows hosts,” CrowdStrike’s Kurtz wrote on the social media platform X the morning afterward. “Mac and Linux hosts are not impacted. This is not a security incident or cyberattack. The issue has been identified, isolated, and a fix has been deployed.”
As we learn more about exactly what happened, is there a particular insight here for banks, fintechs and financial services companies? At a time of heightened concern over third-party risk in our industry, the CrowdStrike outage is yet another reminder of the importance of not only choosing technology partners carefully, but also of ensuring resiliency in the event of an issue with a partner.
The latter is especially pertinent here. Many of the challenges and controversies with regard to third-party risk management in financial services involve the latter, vetting issue, primarily. A signature example is the case of Synapse, the fintech whose allegedly improper handling of customer funds led to more than 200,000 users losing access to their money and numerous disputes with banking partners. CrowdStrike is being accused of no such malfeasance and will, in all likelihood, remain a major player in the cybersecurity industry, with its reputation scratched perhaps but probably not scarred.
That leaves us with resiliency. In banking, the definition of resiliency has expanded significantly in recent years. From the failures of the banking crisis to the strains of the COVID-19 pandemic and accompanying economic slowdown a little over a decade later, banks have dealt with major challenges to both financial and operational resiliency.
The CrowdStrike outage represented a different type of disruption, and one that may be less amenable to the solutions that have ensured bank resiliency in the past (i.e., leadership, talent, and technology). Given many of the common complaints when technology disappoints, it’s worth wondering if we should look at ourselves, not just our institutions, for greater “resiliency.”
To this end, compare the CrowdStrike outage to the AT&T breach this spring. Unlike with CrowdStrike, AT&T reported that “AT&T data-specific fields were contained in a data set released on the dark web.” The breach did not allegedly have “a material impact on AT&T operations.” But it did represent the kind of security challenge that cybersecurity companies are built to prevent, and that banks and financial services companies need to be prepared for. When I read “released on the dark web,” I thought of Finovate Best of Show winner SpyCloud, the Austin, Texas-based cybersecurity company that specializes in retrieving stolen credentials from the dark web.
And it appears as if more and more banks and financial institutions are getting the message. In the past few years, companies like Corsound AI (FinovateEurope 2024 Best of Show winner) to 1Kosmos (FinovateSpring 2023 Best of Show winner) have stood out among fellow fintechs for their innovations in everything from deepfake detection to passwordless authentication. As FinovateFall 2024 draws near, it will be interesting to see what innovations the current crop of cybersecurity specialists bring to the current challenges faced by banks and financial services companies alike.
Core banking platform 10x Banking released its first “meta core” platform for banks.
10x Banking’s meta core will enable banks and financial services companies to accelerate their digital transformations.
10x Banking won Best of Show in its Finovate debut at FinovateEurope 2023.
Cloud-native core banking platform 10x Bankinglaunched a new category of core banking technology today. The company’s new “meta core” is designed to help banks and financial services companies accelerate their digital transformations.
“From my experience, running a bank is all about managing risks, and we’ve designed our meta core to specifically remove the key risks that banks face when upgrading their core,” 10x Banking Founder and CEO Antony Jenkins said. “10x Banking is the first company in the world to offer a ‘meta core,’ which for the first time gives banks a clear roadmap to full transformation.”
10x Banking’s meta core enables banks and system integrators to focus development efforts exclusively on high-value code. By abstracting away common product elements, including the core ledger, the new platform empowers banks to create and maintain as little as 2,000 lines of code for a single customized banking product. This represents a reduction of up to 10x in code base compared to neo-code platforms. The difference is even bigger compared to legacy cores, where the reduction in code base can be as high as 10,000x.
Key to these efficiency gains is the firm’s development tool ProductKit, which is built on 10x Banking’s SuperCore technology. ProductKit features a set of pre-built modules which abstract away the complexity that comes with building deposit and lending products for retail, SME, and corporate banking customers. The platform also puts a premium on the developer experience. Developers can fully customize all of the pre-built modules at every level using any coding language. This helps teams quickly create highly customized banking solutions and experiences without excessive costs or extensive development resources.
“The ‘meta core’ provides banks with the best of all worlds,” Jenkins added, “flexibility on the one hand and unlimited scalability on the other hand. The benefits are much faster speed to market, enterprise-grade security, the ability to unlock data for AI, and a lower cost base.”
London-based 10x Banking won Best of Show in its Finovate debut at FinovateEurope 2023. At the event, 10x Banking demoed its 10x SuperCore Cards solution, which enables banks to build a card proposition in minutes using its 10x Bank Manager interface. The technology empowers financial institutions to build and launch enterprise-grade, full stack functional card business solutions in as little as 12 weeks.
10x Banking began the year securing a $45 million investment in a round led by existing investors BlackRock and J.P. Morgan. The funding took the company’s total equity capital to $297 million, according to Crunchbase. Also in January, 10x Banking announced a partnership with mortgage origination platform Mast, enabling real-time connectivity between the two systems. 10x Banking includes challenger bank Chase UK, Westpac, and Old Mutual, the second largest financial services company in Africa, among its customers.
This week’s edition of Finovate Global highlights recent fintech news from Singapore.
Monetary Authority of Singapore announced plans to invest $74.36 million (100 million Singaporean dollars) to fund quantum computing and AI projects. The funding is part of the Financial Sector Technology and Innovation Grant Scheme (FSTI 3.0) designed to support banks and other financial institutions as they innovate and develop capabilities in both quantum computing and artificial intelligence (AI) technologies.
This month’s investment comes in the wake of a $110 million infusion into FSTI back in August 2023. The FSTI 3.0 was launched in 2022 as part of an effort to fortify and future-proof Singapore’s position as a major international fintech hub. MAS originally pledged 150 million Singaporean dollars to the scheme over a three-year period, and this month’s investment is an addition to that amount. The scheme is live until March 2026, but could be extended.
Given the emphasis on AI in financial services of late, MAS’s interest in quantum computing and its applications for banks and financial services companies is especially noteworthy. MAS will support eligible financial institutions with up to 50% funding for the construction of quantum computing technology centers. Companies that develop quantum computing-based cybersecurity solutions can receive up to 30% in co-funding.
With regard to AI, MAS is also supporting the development of AI innovation centers. Again, one of the main areas of emphasis is cybersecurity, which MAS identified as a use case for the first pilot project. Noting that AI tools have become “more widely accessible” and that “financial institutions have been progressively adopting AI,” MAS also observed that the degree of “AI-readiness and adoption” across financial institutions in Singapore is uneven. The AI component of FSTI 3.0 is designed in large part to remedy this.
Blockchain-based financial infrastructure company Partior has raised more than $60 million in Series B funding. The round was led by Peak XV Partners (previously known as Sequoia Capital India & SEA). Valor Capital Group and Jump Trading Group also participated as new investors along with existing shareholders J.P. Morgan, Standard Chartered, and Temasek.
Founded in 2021, the Singapore-based company offers banks unified, ledger-based interbank rails for real-time clearing and settlement. Partior’s 24/7 blockchain network works with real-time local currency payment and RTGS systems globally and facilitates direct and indirect settlement flows with market participants. The shared ledger further supports transfers with real-time settlement finality, providing instant liquidity and transparency compared to the sequential processing typical of legacy payment systems.
“Partior is breaking down silos and rewriting the rules for cross-border clearing and settlement,” Partior Chief Executive Officer Humphrey Valenbreder said. “We see a very bright future for blockchain-based frictionless, cross-border transactions. Having some of the world’s best banks and investors back our vision validates this even further.”
The fresh capital will fuel new capabilities including intraday FX swaps, cross-currency repos, Programmable Enterprise Liquidity Management, and Just-in-Time multi-bank payments. The funding will also enable Partior to integrate a range of new currencies beyond currently supported USD, EUR, and SGD.
“As one of the founding shareholders of Partior, we’ve always believed in the transformative potential of its technology to shape global financial market infrastructure. This latest round of investment is a testament to the incredible progress Partior has made toward this endeavor,” Temasek Managing Director for Investment (Blockchain) Pradyumma Agrawal said.
DBS and Deloitte have teamed up to launch the Sustainability Accelerator Tool. The new offering will help SMEs in Singapore accurately assess their sustainability maturity levels and identify and address gaps in their efforts.
The two firms hope to empower 1,000 SMEs in Singapore over the next 12 months with the new solution, and plan to introduce the tool to other markets from the next year forward.
“The Sustainability Accelerator Tool is unique in its ability to provide SMEs with meaningful and practical guidance,” Deloitte Southeast Asia Sustainability & Climate Leader Brian Ho said. “Leveraging Deloitte’s expertise in sustainability transformation, it not only identifies strengths and gaps, but also provides actionable recommendations to enhance sustainability performance.”
Three key benefits of the new offering are industry-specific analysis, which provides insights into unique sustainability challenges; customized strategic recommendations based on the degree of progress (“emerging,” “maturing,” or “leading”) the business has achieved in its path toward greater sustainability; and regional adaptability to ensure that the solution can be used by SMEs across Asia.
SMEs using the tool also get a customized Sustainability Readiness Report which gives them an analysis of the company’s sustainability maturity, as well as provides insights on how to address any specific sustainability challenges they may have.
“The Sustainability Accelerator Tool is the latest in our ongoing efforts, where we strive to futureproof SMEs through practical and holistic solutions,” DBS Group Head of Corporate and SME Banking Koh Kar Siong said.
The introduction of the Sustainability Accelerator Tool follows the spring launch of DBS’s ESG Ready Programme to help SMEs efficiently transition to lower carbon business models. Headquartered in Singapore, and boasting a presence in 19 markets, DBS provides a full range of consumer, SME, and corporate banking services. The firm has been named “Safest Bank in Asia” by Global Finance for 15 consecutive years from 2009 to 2023.
Here is our look at fintech innovation around the world.
Central and Eastern Europe
International embedded finance platform Liberis announced its entry into the German market in partnership with Nexi.
Lithuanian identity verification company iDenfy unveiled its automated utility bill verification tool.
Germany-based private markets platform bunch secured $15.5 million in Series A funding.
India-based payments and API banking company Cashfree Payments secured a payment aggregator-cross border license from the RBI.
Latin America and the Caribbean
The Brazilian central bank announced a pause in their plan to add recurring payments to its Pix platform.
Argentine fintech Tapi secured $22 million ahead of its expansion into Mexico.
BBVA opened an international cybersecurity center in Mexico.
Asia-Pacific
Melbourne, Australia-based Airwallex secured an Australian Financial Services License (AFSL) from the Australian Securities and Investment Commission (ASIC) the first major payments company to do so.
Bank Indonesia and Bank of Korea inked a MoU to encourage cross-border payments between the two countries.
In a bid to become a “global fintech hub,” the Monetary Authority of Singapore (MAS) has invested $74.36 million (100 million Singaporean dollars) into quantum computing and AI projects.
Sub-Saharan Africa
South African fintech Peach Payments acquired custom software development firm Operativa.
